It’s Official: China Will Be Dumping US Dollars

[JJ.G0ldD0t]

http://www.zerohedge.com/article/it%E2%80%99s-official-china-will-be-dumping-us-dollars


In case you missed it, earlier this week China announced that its foreign currency reserves are excessive and that they need to return to “reasonable” levels.

(anybody see that anywhere else??)


In politician speak, this is a clear, “we are sick of the US Dollar and will be taking steps to lower our holdings.” Remember, the US Dollar is China’s largest single holding. And China has already begun dumping Treasuries (US Debt).



This comes on the heels of China deciding (along with Russia) to trade in their own currencies, NOT the US Dollar. Not to mention the numerous warnings Chinese politicians have been issuing to the US over the last 24 months.



In simple terms, China is done playing nice and is now actively moving out of US Dollar denominated assets. This is the beginning of the US Dollar’s end as world reserve currency.



The dimwits in Washington don’t understand this because their advisors are all Wall Street stooges who don’t think debt or deficits matter. After all, why would they? Their entire business model is now based on endless cheap debt from the US Fed. So it’s only logically (in their minds) that the US as a sovereign state engage in the same strategies.



What does this mean? We’re on out own in terms of preparing for what’s coming. The US Dollar has already taken out its 2009 low in the overnight futures session. We now have only one line of support before the US Dollar breaks into the abyss (all time lows).



So if you’re not preparing for mega-inflation already, you need to start doing so NOW. The Fed WILL continue to pump money into the system 24/7 and it’s going to result in the death of the US Dollar.



If you’ve yet to take steps to prepare your portfolio for the coming inflationary disaster, our FREE Special Report, The Inflationary Disaster explains not only why inflation is here now, why the Fed is powerless to stop it, and three investments that absolutely EXPLODE as a result of this.



All in all its 14 pages contain a literal treasure trove of information on how to take steps to prepare AND profit from what’s to come. And it’s all 100% FREE.



To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.



Good Investing!



Graham Summers

[Twisted Titan]

.......................

[JJ.G0ldD0t]

From Karl D. :

Rumor: China To Revalue Yuan 10% This Weekend?


http://market-ticker.org/akcs-www?post=184595


Just stated on CNBC.

I have no way to judge that, but if it comes it is both good and bad.

The good: It's about a third of what has to happen, and as a step function it would apply major cooling to the "Chinese miracle" inflation machine. They need to do that too, which makes the rumor plausible. Coming on a long trading weekend here (Good Friday/Passover closes us this week) and on a weekend anyway (China's favored time to do this sort of thing) it would be appropriate both in terms of timing and event.

The bad: While there would be no direct dollar impact from this action since the Yuan is not convertible and thus not part of the $DXY index the indirect effects would be tremendously disruptive in the short term. This has a high probability of forcing corrective actions by The Fed, perhaps even before the futures market reopens Sunday night. The risk for The Fed and United States is that the dollar winds up gapping down by hundreds of pips, perhaps threatening the all-time low. Violation of the all-time low could result in massive pressing of short bets and a possible immediate fiscal crisis.

Please don't take this article the wrong way - I strongly support a Chinese action such as this, even though it's not enough on its own. The move in the dollar today may be related to this rumor and expectation of action over the weekend.

Beware coming into the weekend with this rumor out there; volatility is, in my opinion, radically cheap against reality and the complacency being displayed by the market is flat-out ridiculous.

[mick silver]

china may do something , but it would hurt them just as much as us here . but who knows what games are being played . china maybe tired of us running around the world making war and not paying them back

[Libertytree]

china may do something , but it would hurt them just as much as us here . but who knows what games are being played . china maybe tired of us running around the world making war and not paying them back


There is a difference though...China doing something monetarily or even physically against their population isn't a surprise but in the US it's different, the masses here aren't mentally geared to accept such changes and don't even understand the net results. They lived through Tianamen Square and constant police state tactics and we are still absorbed in fantasy land. Changes are coming but the Americans are NOT prepared for it, in any manner.

[Plastic]

And they will freak out... burn down their own homes... and demand a dictator to fix things intentionally broken...

[JJ.G0ldD0t]

http://www.zerohedge.com/article/china-proposes-cut-two-thirds-its-3-trillion-usd-holdings


All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait. Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be. Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so. And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?


From Xinhua:

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

And as if the public sector making it all too clear what is about to happen was not enough, here is the private one as well:

China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.

Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.

However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.
The last sentence says it all. While China is certainly tired of recycling US Dollars, it still has no viable alternative, especially as long as its own currency is relegated to the C-grade of not even SDR-backing currencies. But that will all change very soon. Once the push for broad Chinese currency acceptance is in play, the CNY and the USD will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that US debt is no longer a viable investment opportunity. In fact, we are confident that the reval is a likely a key preceding step to any strategic decision vis-a-vis US FX exposure (read bond purchasing/selling intentions). As such, all those Americans pushing China to revalue, may want to consider that such an action could well guarantee hyperinflation, once the Fed is stuck as being the only buyer of US debt.

[JJ.G0ldD0t]

http://news.xinhuanet.com/english2010/china/2011-04/23/c_13842843.htm

China should cap forex reserves at 1.3 trillion U.S. dollars: China banker


BEIJING, April 23 (Xinhua) -- China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.

Meanwhile, Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.

However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.

[Son of Dave]

I'm guessing we'll see the DOW go up about 35 points. And the USDX possibly plum below 74. In other words: Bizarro world.

When does QE2 end again? Middle of June?

[SilverMagnet]

Look for Silver to make even more explosive gains tomorrow.

[FunnyMoney]

All talk and no show. It is nothing more than a bluff to try and get DC to cut the budget drastically and thus be able to slow the paper printing. It is also an attempt to push investor awareness of their own paper currency as in a much better position.

They are already spending their USD reserves (divesting) as fast as they can. It is impossible for them to speed that up much more. It is also impossible for them to dump the currency onto the FX markets and it is impossible for them to dump their USD based bonds onto the bond market. Any such move would collapse prices prior them getting rid of even 5% or their holdings. They are stuck between a rock and a hard place and despite the jaw-boning will be forced to simply suffer through the next decade worth of severe inflation along with everybody else.

Of course all this jaw-boning and continued slow moves toward divesting and diversification is the best case scenario for everyone (all NWO govts) involved. The alternatives, or other scenarios, involve an onset of global hyper-inflation, economic depressions and big time war.

[Son of Dave]

Markets just opened.

Silver up .87¢ gold up $6 bucks.

Damn.